The Best Real Estate Dividend Stock for Years of Passive Income

Bridgemarq Real Estate Services Inc. (TSX:BRE) is a real estate dividend stock that offers monster passive income in an uncertain climate.

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Bridgemarq Real Estate (TSX:BRE) is a Toronto-based company that provides various services to residential real estate brokers and REALTORS across Canada. Life has been made a little more difficult for individuals in this line of work over the past two years. Regardless, I’m still looking to target Bridgemarq today. Let’s explore why this dividend stock is perfect for Canadians who are hunting for passive income.

How has this real estate dividend stock performed over the past year?

Shares of this dividend stock have plunged 18% year over year as of close on February 22. However, the stock has jumped 4.2% so far in 2023. Investors who want a more detailed look at its recent performance can play with the interactive price chart below.

The state of Canadian real estate today

Canada housing entered 2022 with the wind at its back. The COVID-19 pandemic spurred demand, as buyers continued to gorge on low interest rates in a friendly credit environment. However, soaring inflation started to alarm policymakers in the early part of the previous year. In response, the Bank of Canada (BoC) pulled the trigger on its most aggressive interest rate tightening policy in over a decade.

Unsurprisingly, this has significantly cooled a previously red-hot Canadian real estate market. This is especially true for the largest metropolitan areas. Last week, the Canadian Real Estate Association (CREA) said that home buying sank to a 14-year low for the month of January. Meanwhile, sales volumes were 37% lower than the same month in 2022. It is worth noting that January 2022 was the second-best January on record.

The CREA reported that the national average home price in Canada was down 18% year over year to $612,204. Moreover, the CREA’s benchmark Home Price Index has declined 15% from its peak in February 2022.

Housing investors should not give in completely to pessimism. Canadian real estate has major challenges to face in the near term. However, it should also benefit from consistently low demand and an immigration rush that will bring half a million newcomers annually to Canada by the middle of this decade. Meanwhile, Canada’s inflation rate slowed to 5.9% in January. This illustrates that the BoC’s rate-tightening policy is starting to bear fruit.

Here’s why I’m sticking with this dividend stock for its big passive income!

Bridgemarq has predictably been hit by volatility in this difficult time for the broader housing market. Investors can expect to see its final batch of fiscal 2022 earnings in the first half of March 2023.

In the third quarter (Q3) of 2022, Bridgemarq reported revenues of $39.4 million, which was largely flat compared to the third quarter of fiscal 2021. Unfortunately, the company posted a net loss of $1.1 million, or $0.12 per share, compared to net earnings of $3.9 million, or $0.28 per share, in the previous year. Distributable cash flow (DCF) also fell to $4.8 million compared to $5.2 million in Q3 FY2021.

Shares of this real estate dividend stock possess an attractive price-to-earnings ratio of 10. That puts Bridgemarq in more favourable value territory compared to its industry peers. Better yet, it offers a monthly dividend of $0.113 per share. That represents a monster 10% yield.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bridgemarq Real Estate Services. The Motley Fool has a disclosure policy.

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